Illinois ERISA Lawyer Blog

Employees in Chicago, and all over Illinois, are starting to become more aware of a state law ban on discretionary clauses in various insurance policies that fund their employee benefit plans, such as long-term disability, health insurance, and life and accidental death insurance. In 2005, the Illinois Department of Insurance enacted 50 Ill. Adm. Code § 2001.3, which bans insurers offering or issuing long term disability, health, or life or accidental death insurance policies in Illinois from having a discretionary clause in any "policy, contract, certificate, endorsement, rider application or agreement". However, this regulation only applies to insurance policies issued or offered in Illinois. If you work in Illinois, how do you know then whether you have protection from this ban on discretionary clauses?

The answer is not as simple as one might expect. Where an insurance policy is issued or offered can be a tricky question to answer. It may involve looking at the face of the policy, and where the policy said it was executed. Where is the employer's headquarters? Recently in a case in Michigan, the employee (or plan participant) argued that the Michigan ban on discretionary clauses should apply because the insurance policy benefited Michigan employees. See Foorman v. Liberty Life Assurance Co. of Boston, No. 12-927 (W.D. Mich. May 3, 2013). The court rejected this argument because the employer, Comcast, was headquartered in Philadelphia, Pennsylvania. Also, the insurance policy expressly stated it was issued in Pennsylvania, and governed by that state's laws. Pennsylvania has no similar ban on discretionary clauses.

On the other hand, a Chicago court has reached a slightly different conclusion in Curtis v. Hartford Life & Accident. Insurance. Co., No. 11 C 2448 (N.D. Ill. Jan. 18, 2012). There, Children's Memorial Hospital, based in Illinois, subscribed to a trust based in Delaware, that pooled employers to buy an insurance policy issued in Delaware, which has no ban on discretionary clauses. However, Children's Memorial paid the premiums to Hartford, and Hartford was not obligated to accept any employer subscribed to the trust. The Chicago court held that to not apply the ban on discretionary clauses in these circumstances would promote "form over substance."

If you have a claim for long term disability, health, or life insurance benefits, call an experienced ERISA attorney who knows how to determine whether your benefit plan will include an enforceable discretionary clause.

Chicago area employees with coverage under an employer-sponsored long-term disability insurance plan, health insurance plan, or life or accidental death insurance plan often do not know or think about how a standard of review affects their rights until after they have submitted a claim. It dramatically can affect how the insurer handles the claim, and the outcome in any litigation if the insurer upholds its denial of a claim. Although Illinois has enacted a regulation banning insurers of these types of plans from having discretionary authority to make benefit determinations or to interpret the terms of the plan, insurers are persisting in trying to find loopholes in the regulation, or a way around it. Most active in this endeavor appears to be Cigna, appearing in litigation under its subsidiary's name, Life Insurance Company of North America.

In 2005, the Illinois Department of Insurance enacted 50 Ill. Adm. Code § 2001.3, which bans insurers offering or issuing long term disability, health, or life or accidental death insurance policies in Illinois from having a discretionary clause in any "policy, contract, certificate, endorsement, rider application or agreement". Long ago, courts determined that this regulation was not preempted by the Employee Retirement Income Security Act of 1974 ("ERISA") in cases where the insurance policies themselves continued to contain such clauses. The next wave of cases considered whether insurance policies originally issued prior to the regulation's enactment, but renewed after it, were affected by the ban. Courts issued mixed rulings, but the Department of Insurance issued guidance stating that the regulation applied to policies renewed after its enactment. Now, employers' master welfare plan documents and summary plan descriptions contain the discretionary clauses, while the insurance policies do not, and the insurers are arguing that such a plan structure evades the regulation. Cigna has been the most active in advancing this argument, but it has failed now in every case in Chicago.

Most recently, Cigna made this argument in Borich v. Life Insurance Company of North America, 2013 U.S. Dist. LEXIS 59674 (N.D. Ill. Apr. 25, 2013). There, Judge John Tharp ruled that the regulation applies even where the discretionary granting language is in plan documents other than the insurance policy, and that ERISA does not preempt the regulation. A similar holding was reached in Ehas v. Life Insurance Company of North America, 2012 U.S. Dist. LEXIS 169151 (N.D. Ill. Nov. 29, 2012). The very same issues are pending before another judge in the same district in Novak v. Life Insurance Company of North America.

If you have a claim for long term disability, health, or life insurance benefits, call an experienced ERISA attorney today to learn about how discretionary clauses can affect your claim.

Chicago area employees with coverage under an employer-sponsored health insurance plan involved in any type of accident caused by another party often find themselves in two disputes. The first, obviously, is a personal injury dispute, be it with the other driver of an automobile, or a premises owner where an injury occurred. After the injury, naturally the person goes to the hospital, or gets subsequent medical treatment, which become part of the damages in the injury dispute. To no surprise, rather than pay the expenses out of pocket and seek recovery potentially years later, the injured parties pay the medical expenses with their own health insurance. But later, the health insurer or plan wants to be reimbursed for its own outlays for the medical expenses. Problems arise when the participant is forced to settle a case for a fraction of the actual damages due to lack of the opposing party's insurance coverage, or in how to handle attorneys' fees the injured party paid. The health insurers and plans routinely try to enforce clauses which purport to entitle the plan or insurer to full reimbursement, even if that would mean leaving the injured participant with no net recovery, or worse, in the hole after paying attorneys' fees.

This was precisely the fact pattern in McCutchen v U.S. Airways, 133 S. Ct. 1537, the facts of which were covered in a prior post here. In a surprising move, the Supreme Court held that no matter what, the plan document language must control. But if the plan is silent as to the applicability of things like how the plan and the participant will apportion attorneys' fees, then equitable principles such as the common fund doctrine fill in those gaps. Under the common fund doctrine, a recipient of the fruits of an attorneys' labor must share in the attorneys' fees. In the scenario above, if the attorney in the personal injury matter charged a one-third contingency fee, the plan would have to share in that fee from the medical expenses it recovered. The problem with the decision is that it leaves the door open for plans to start including language that would prevent these principles from applying, and quite possibly more and more plans will do just that. This could also impact disability insurance plans that contain a clause with a right to reimbursement for disability benefits from the Social Security Administration.

If you are in a dispute with your employee benefit plan about a reimbursement, speak with a knowledgeable ERISA lawyer right away.

Chicago area employees with coverage under an employer-sponsored long-term or short-term disability plan may be surprised to find out that when drafting the plan, their employer inserted a clause purporting to require that you have to file your lawsuit in a distant state if your claim is denied and you have to sue for your benefits. In fact, the Department of Labor has filed briefs in cases opposing such clauses, noting there is a "disturbing trend" among employers to place such clauses in their plans. In Chicago, one court put a stop to that trend in a case I am handling.

In Coleman v. Supervalu, Inc., No. 12-7064, 2013 U.S. Dist. LEXIS 13372 (N.D. Ill. Jan. 31, 2013), Ms. Coleman sued Supervalu because its claims administrator denied her claim for disability benefits. After she sued, Supervalu moved to dismiss the lawsuit, citing a provision in the plan that purports to require any employee covered by the plan to bring the lawsuit in Minnesota, where Supervalu is headquartered. Virtually every court to consider whether such a clause is enforceable has concluded it is, and the employee can be forced to bring a lawsuit for benefits where the employer is headquartered. The court in Coleman, however, disagreed. Relying on the legislative history and an appellate court case that acknowledged choice of venue was meant to be a participant right, the court held ERISA prohibits the plan administrator from stripping a participant of the right to choice of venue.

With regular contracts, parties are free to negotiate and agree to virtually whatever terms they like. But when employers establish ERISA plans, they do not do not start with a clean slate as with a garden variety contract. They establish the plan subject to all of ERISA's requirements, which cannot be waived. One of those provisions is a participant right to a wide selection of venue for a potential dispute. Congress gave participants a broad choice of venue in 29 U.S.C. § 1132(e)(2), which allows a lawsuit to be brought where the plan is administered, where the denial of benefit occurred, or where any defendant can be found. Courts that have upheld these forum selection clauses in plans have done so primarily because the clauses require litigation to take place in the home venue of the employer, or where the plan is administered, thus appearing to meet the requirements of the statute. But in Gulf Life Insurance Co. v. Arnold, the Eleventh Circuit explained that ERISA's broad venue provision was intended to be a sword wielded by participants and beneficiaries, not by plan administrators. ERISA's legislative history is consistent with the concern.

If you have a claim for benefits, and your employer's plan contains a forum selection clause, call an experienced ERISA attorney today.

Long term disability applicants in Chicago are discovering that their employer sponsored long term disability insurance policies often have clauses which place a 24-month limit on disability benefits caused by any mental or psychiatric conditions, including depression, anxiety, ADHD, etc. For years, insurers would argue that a 24-month limitation applies any time a claimant's list of conditions included depression or anxiety. Claimants have been able to overcome those benefit terminations by showing that even if any mental or psychiatric conditions are ignored, they are nevertheless physically disabled. More recently, though, Prudential terminated benefits after a claimant developed severe cognitive impairments following a car accident in which he was injured. The court did not allow Prudential to get away with this one in White v. Prudential Insurance Co. of America, No. 11-3394 (E.D. Pa. Nov. 9, 2012).

After a 2007 auto accident, White was diagnosed with post-concussion syndrome--a traumatic brain injury--and experienced emotional and psychological strain, anxiety, and depression. Prudential denied White's initial claim, but after two appeals overturned the denial. After 24 months, Prudential terminated the payments, claiming the cognitive impairments were subject to the limit for mental illnesses. White appealed, but Prudential never responded to his appeal. White sent several letters following up with Prudential to try to spur a determination, but nothing happened. Almost a year later, White just filed his lawsuit. After White filed the lawsuit, Prudential produced a letter upholding the benefit denial. The letter was dated 10 months after White submitted the appeal, clearly in violation of ERISA's 45-day deadline for an insurer to respond to an appeal.

The judge awarded a judgment in White's favor. The judge determined that while ERISA does not require an insurer to give special weight to treating physicians' opinions over its own retained physicians' opinions, Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), Prudential improperly ignored all the opinions which concluded White's disability was caused by the head trauma suffered in the 2007 auto accident. Though the disability is due to a mental illness, if the mental illness is caused by a physical injury, then the 24-month limitation does not apply.

If your long term disability benefits have been terminated pursuant to a limitation on mental illnesses, and you believe the disability relates to a physical injury, call an experienced ERISA lawyer.

Disabled employees in Chicago and the rest of Illinois who are receiving long term disability insurance benefits under an employer sponsored plan frequently call my office explaining that they suspect the insurer has placed them under surveillance. I find people are usually unnecessarily afraid of the fact they have been under surveillance. There was a time when if insurers captured surveillance footage of a disability benefit recipient doing anything like grocery shopping, or picking up a prescription, they would almost automatically terminate the benefits. But any surveillance footage must be viewed in comparison to what the insurer thought the insured's functional imitations were. In a recent case, Prudential improperly terminated a person's disability insurance benefits based on surveillance footage showing the person doing nothing inconsistent with what she reported. Davis v. The Prudential Insurance Company of America, No. 11-13688 (E.D. Mich. Sept. 28, 2012).

The United States Court of Appeals for the Seventh Circuit has clarified under what circumstances an insurer may rely upon surveillance evidence in terminating disability benefits. The insurer may rely on eh surveillance video where the video shows the disabled claimant doing things that he or she claimed to be unable to do. Marantz v. Permanente Med. Group, Inc. Long Term Disability Plan, 687 F.3d 320, 329 (7th Cir. 2012) (holding the administrator did not abuse its discretion in relying on surveillance where the claimant was observed performing multiple physical activities she reported she could not perform, and did so multiple days in a row); Mote v. Aetna Life Ins. Co., 502 F.3d 601, 609 (7th Cir. 2007) (holding the administrator properly considered surveillance because it showed the claimant performing activities she reported in her application she could not do). However, just because the video shows the claimant doing something does not make the footage inconsistent with the claimant's reported abilities. See Osbun v. Auburn Foundry, Inc., 293 F. Supp. 2d 863, 870 (N.D. Ind. 2003) ("[E]vidence that Osbun can perform light physical tasks for 1.5 hours over two days falls far short of demonstrating that he is capable of sustaining a job. Auburn produced no evidence showing how long Osbun can perform such tasks, whether he can perform them on a daily basis, or how much pain he must endure in the process.").

If you are receiving long term disability insurance benefits, and suspect you have been placed under surveillance, speak with a knowledgeable ERISA lawyer.

Individuals in Chicago and the rest of Illinois who have had to bring a lawsuit for employer sponsored long term disability plan benefits have often been frustrated when they sue the insurance company responsible for paying the benefits and administering the claims, and the insurance company argues it is not a proper party to the lawsuit. This has been problematic for several reasons. First, the insurance company is usually the only source of money to pay the benefits. Second, even if you get a judgment against a plan, the insurance company has to honor its commitment without actually being ordered to do so. For these reasons, individuals suing to enforce their rights under ERISA have often preferred to name the insurance company as a defendant in addition to the plan. When the insurers have challenged being named as a party to the lawsuit, they have met mixed results. Recently, a federal court in Chicago clarified when the insurer is the proper party.

In Ayotte v. Prudential Insurance Company of America, the district court held that Prudential was properly named as a defendant in a case where Mr. Ayotte sued for long term disability insurance benefits. Prudential moved to dismiss, arguing it was not a proper party to the lawsuit. The court disagreed where, as here, the plan administrator (Prudential) was "closely intertwined" with the plan itself. While the district court had on other occasions held that the insurer cannot be named as a party, Judge Gottschall wrote that those decisions misconstrued the authority. Nothing in ERISA § 502(a)(1)(B) prohibits naming the insurer as a defendant where the insurer "issues and administers a plan, determines eligibility for benefits, and pays all claims under the plan." In such a case, the insurer is intertwined with the plan and in control of the benefits. This decision is in line with a recent decision out of the Ninth Circuit Court of Appeals, Cyr v. Reliance Standard Life Insurance Company, 642 F.3d 1202 (9th Cir. 2011) (en banc).

If you have questions about pursuing a long term disability insurance claim, consult with an experienced ERISA lawyer.

Individuals in Chicago with employer provided health insurance governed by ERISA who have been injured in an accident have been disappointed to find out that after their injury case settled, the health insurer demanded full repayment of the medical costs. This has been problematic for several reasons. Usually, the cases involve some uncertainty, and they settle for less than the full demand. Alternatively, your injuries may have been caused by a person who carried less insurance coverage than necessary to fully compensate you. Nevertheless, courts routinely held that if the health insurance plan contained a reimbursement clause, the plan could place a lien on your settlement funds for full reimbursement of medical costs.

Recently, the Supreme Court agreed to hear a case where the United States Court of Appeals for the Third Circuit held that it was not "appropriate equitable relief" for the plan to obtain full reimbursement, when the individual could not obtain a full recovery himself. See U.S. Airways, Inc. v. McCutchen, 663 F.3d 671 (3d Cir. 2011). In McCutchen's case, if the plan were entitled to full reimbursement, after paying the legal fees and costs of obtaining the recovery, he would actually be worse off than had he not pursued any recovery in his personal injury matter. This is similar to a recent case from the Ninth Circuit, where the court held that the insurance plan's claim was limited by equitable defenses where the injured party only recovered 21% of her damages. See CGI Techs. & Solutions, Inc. v. Rose, 683 F.3d 1113 (9th Cir. 2012). The Supreme Court will thus answer the question whether health insurance plans always get full reimbursement, or their claims can be reduced where the injured party recovers less than her demand, and whether the plan must share in attorney fees and costs.

The issue of reimbursement typically impacts individuals involved in personal injury matters, with a health insurance plan that covered their medical costs. It also impacts long term disability insurance recipients who have subsequently been awarded Social Security disability benefits. If the Supreme Court holds that the health plan must share in legal costs in McCutchen, it may mean that long term disability insurers must pay your lawyer's fees for obtaining Social Security disability benefits.

If you have questions about reimbursement to either a health insurance plan or disability insurance plan, speak with a knowledgeable ERISA lawyer.

Many individuals in Chicago are often outraged after claiming life insurance plan benefits to be informed by the insurer or administrator that the insured person--whoever passed away--was no longer eligible to be insured at the time of death, even though they had been paying premiums for the coverage, and the insurer had been accepting those premium payments. There was a time when it was generally accepted that all the claimant could then recover were the premiums he or she paid while there was no valid coverage. Then the United States Supreme Court rendered an opinion in Cigna Corporation v. Amara, which opened the door to arguing that the deceived participant should get more than just the premiums back; she should get what she was promised she would get, which are the insurance proceeds in the event the insured died.

After the decision in Amara, that is what the Fourth Circuit Court of Appeals decided in McCravy v. Metropolitan Life Insurance Company on July 5, 2012. In that case, McCravy purchased life insurance coverage for her daughter through her employer sponsored plan, which MetLife insured. McCravy paid all the premiums on time for her daughter's coverage, until her daughter was murdered at the age of 25. McCravy claimed the life insurance benefits, but MetLife told her that under the policy, an unmarried dependent enrolled full time in school could only be covered until age 24, so McCravy's daughter was not covered at the time of death. MetLife tried to send McCravy the premiums back as a remedy, but McCravy sued for the insurance benefits.

The Court of Appeals held that MetLife's acceptance of premium payments on the daughter's behalf after it knew she was too old to be a covered dependent could be the basis for a claim the insurer breached a fiduciary duty by misrepresenting to McCravy that there was coverage. Finally, following Cigna Corporation v. Amara, courts are beginning to award the sort of make-whole relief previously denied to plan participants.

If your employer or insurance company misrepresented something to you about coverage under a life insurance plan, contact an ERISA lawyer.

Many individuals in Chicago and all around America receiving long term disability insurance benefits wonder what happens after they have been approved for Social Security disability benefits. If you have applied for long term disability from your employer sponsored disability plan, the insurer probably told you that you need to apply for Social Security disability benefits. That is because under the terms of the insurance policy, once the insurer begins paying you, any benefits you obtain from the Social Security Administration will offset your insurance benefits dollar for dollar.

The first question people ask is whether or not they actually must apply for those Social Security benefits. The answer is usually yes. The insurance policies almost always require, as a condition for receiving long term disability insurance benefits, that you apply for Social Security disability benefits, and proceed through all levels of appeal of any denial. The next question people ask is why the insurer says they need to give the past due Social Security benefits to the insurer. If the long term disability insurer began paying you first, and the policy provides for the offset, the insurer is owed those previous overpayments. The final question people ask is what can the insurer do to recover that overpayment.

According to a recent case, Bilyeu v. Morgan Stanley Long Term Disability Plan, 683 F.3d 1083 (9th Cir. June 20, 2012), the insurer essentially had no recourse unless it was continuing to pay the claimant the benefits. The court prevented the insurer from being able to sue for the actual Social Security disability proceeds. However, the insurer would have been able to withhold future long term disability payments. The plan's insurer, First Unum Life Insurance Company, terminated the benefit payments, though, so it was not able to enforce its purported right to the Social Security overpayment. Caution, though, that other courts have reached different decisions.

If you have questions about what you need to do when seeking or receiving long term disability insurance, contact an ERISA lawyer.

Employees in Chicago with an employer-sponsored disability plan who had a claim denied often fear two things: what will they do if they do not get their benefits, what will they do for money until the insurer does pay? Disability cases can drag on, in some cases only being resolved several years after the insurer initially denied a claim. But even assuming your case goes to litigation in court, and you win your case, is merely paying you today what you should have received three years ago really adequate? Often the answer is: no. Courts may, in their discretion, award a prevailing plaintiff in an ERISA case prejudgment interest. A court in California recently did just that. Letvinuck v. Aetna Life Ins. Co., No. 06-2831 (C.D. Cal. Dec. 2, 2011). After Letvinuck successfully appealed her case to the Ninth Circuit, and obtained a reversal in her favor, she moved for prejudgment interest, and the District Court awarded it.

In the judicial circuit in which Illinois sits, the Seventh Circuit, a court presumes prejudgment interest is applicable. Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 820 (7th Cir. 2002). But how much interest do you get? Generally, the court can award prejudgment interest for your losses. But that does not necessarily convert to the amount of interest you had to pay if you borrowed money to make ends meet. It is even more problematic when the plaintiff cannot document the amount of interest he or she actually paid. Sometimes courts will apply the post-judgment interest rate to prejudgment interest. The court can vary from that figure with a showing that the lost investment opportunity (i.e., the rate you could have earned had you invested the benefits) was higher than the statutory post-judgment interest rate. This, of course, raises the complexity of getting compensated for the time you were not paid. But when the compounded sum of past due benefits is a significant number, the mental gymnastics, number crunching, and math-letics may be worthwhile.

If you have a question about your rights and potential recoveries in ERISA litigation, consult an ERISA lawyer.

Employees who are participants in disability plans sponsored by Chicago area employers frequently call my office after receiving a letter denying a claim for benefits. Often times, the reason for the denial may have been a procedural error by the administrator, preventing it from giving you a "full and fair review", as required by ERISA. The denial letter must explain the reason for the denial, it must reference the specific plan provision upon which the denial is based, and it must describe any additional material or information you would need to submit in order to get the benefits. 29 C.F.R. § 2560.503-1(g)(1).

ERISA imposes a high standard of care upon fiduciaries that make decision on claims. Merely telling claimants they need to submit additional medical records will not typically meet this standard. But even where the administrator fails to meet this standard, the question may arise whether the claim was denied for lack of supporting evidence or not. Such was the case recently in Tortora v. SBC Communications, Inc., 2011 U.S. App. LEXIS 22407 (2d Cir. Nov. 3, 2011). Sedgwick, as claims administrator for SBC's disability plan, denied a claim and stated "You may also submit additional medical or vocational information, and any facts, data, questions or comments you deem appropriate for us to give your appeal proper consideration." The court held that language did not meet the standard imposed by ERISA because it did not provide proper notice of how to perfect the claim. However, according to the denial letter, the medical records submitted were not indicative of disability, so the error was harmless.

If you have received a letter denying your claim for benefits and have questions about whether the denial was proper, call an ERISA lawyer.

More and more frequently, employees in Chicago on long term disability through an employer-sponsored disability plan are facing benefit terminations for conditions such as Fibromyalgia and Chronic Fatigue Syndrome because of a so called "self reported symptoms" limitation in the long term disability policy. Insurers more frequently place these limiting clauses in disability policies, assuming they would dispose of all the Fibromyalgia and Chronic Fatigue Syndrome cases within 24 months. But not so fast. After withdrawing its opinion in Weitzenkamp v. Unum Life Insurance Co. of America, the Seventh Circuit Court of Appeals reissued an opinion, again ruling in favor of the claimant, but on different grounds. 2011 U.S. App. LEXIS 19283, 2011 WL 4375637 (7th Cir. Sept. 20, 2011).

I previously covered this opinion, and he suspicion for why the court may have withdrawn its opinion. This time, the Seventh Circuit held that although the limitation on self reported symptoms was a part of the plan, it did not apply in Weitzenkamp's case. The limitation in this policy could be construed one of two ways. Either a limitation that limit applicable to all disabilities where the disabling conditions are self-reported symptoms, as UNUM proposed, or as a limit on disabilities where the diagnosis of the condition is based primarily on self reporting of symptoms. The Seventh Circuit held that the latter construction was more reasonable. With every condition, it is not the condition itself that disables the person, but the pain, weakness, etc. associated therewith that renders the person disabled. To construe the limitation as UNUM suggested would literally cause every disabled person to have his or her benefits limited to 24 months pursuant to one of these clauses. Because in Weitzenkamp's case, the physicians had considered plenty of other data along with the self reported symptoms, the court held the limitation did not apply.

The lesson to be learned from Weitzenkamp is to make sure a doctor treating you for Fibromyalgia or Chronic Fatigue Syndrome runs appropriate tests to rule out other possibilities before diagnosing your condition. If the doctor does so, and your plan has a clause like the one in Weitzenkamp, you may be able to avoid application of such a limitation. If you have questions about a self-reported symptoms limitation, speak with a knowledgeable ERISA attorney.

Employees and executives in Chicago frequently want to know when a participant in an ERISA covered plan can recover attorney fees. ERISA does provide for fee shifting in litigation. ERISA § 502(g). However, these fees are only recoverable once they are incurred in litigation upon achieving "some degree of success on the merits." Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149, 2152 (2010). This case changed the standard, where previously a claimant had to be a prevailing party. This gave long term disability insurers and plan administrators every incentive to withhold benefits, wait until a complaint was filed, and then just pay the claim--preventing the claimant from becoming a prevailing party. This precise strategy was demonstrated recently in Pakovich v. Verizon LTD Plan, No. 10-1889, Slip Op. (7th Cir. July 22, 2011).

In Pakovich, the claimant achieved a remand in court back to the administrator to make a determination on her benefits claim. Rather than make the determination on remand, the plan just did nothing. After several months, Pakovich filed another complaint in court seeking benefits due, arguing he claim was "deemed denied" because the plan did not render a decision on her claim within the time allowed by ERISA. Soon after filing the complaint, the plan paid all benefits due. The plan then moved to dismiss the case, arguing it was moot. The district court granted the motion, and denied any attorneys fees to Pakovich because she was not a prevailing party. Both parties appealed.

The Seventh Circuit Court of Appeals held the claim for benefits was moot, because the plan paid Pakovich all the benefits to which she was entitled. But the court also held the plan had to pay Pakovich's attorney fees. A contrary holding would permit "opportunistic plans [to] routinely delay deciding whether to pay benefit claims until participants and beneficiaries file suit, effectively requiring them to incur legal costs unrecoverable under ERISA § 502(g) in order to receive benefits to which they are legally entitled . . . . Such a barrier would contradict one of ERISA's primary policies, to protect 'the interests of participants in employee benefit plans and their beneficiaries . . . ." Id. at 9.

If you are a participant in an employer-sponsored employee benefit plan and the administrator or insurer is not responding to your claim for benefits, contact an experienced ERISA lawyer.

A recent ruling from the Seventh Circuit Court of Appeals in Chicago protected employees with conditions such as fibromyalgia or chronic fatigue syndrome who have an insurer deny benefits based on an exclusion that was not properly disclosed to the employee. Weitzenkamp v. UNUM Life Ins. Co., No. 10-3898, 2011 U.S. App. LEXIS 14180 (7th Cir. July 11, 2011). In this case, Weitzenkamp was diagnosed with fibromyalgia, chronic pain, anxiety, and depression. UNUM awarded her long term disability benefits. After two years of paying the benefits, however, UNUM cut off her payments, citing a clause in the policy that limits benefits paid because of a disability dependent on "self-reported symptoms." The problem was that UNUM also prepared a summary plan description of the plan, and referenced a two-year limitation on benefits in three separate locations (all referencing mental health), but the SPD never mentioned the self-reported symptoms limitation.

The Seventh Circuit Court of Appeals held that the failure to include this important limitation in the SPD was a violation of the part of ERISA that requires the SPD to disclose the material terms of the plan. ERISA § 102. Because UNUM did not disclose this critical limitation in the SPD it distributed to participants, the court held UNUM could not then rely on the limitation in order to terminate benefits. The court did grant a rehearing on this case, and we will track its progress.

If you are a participant in an employee benefit plan and the administrator or insurer denied or terminated your benefits based on a limitation or exclusion not previously disclosed to you, call an ERISA lawyer.